Thursday, December 19, 2013

How to Sue Your Bank in Small Claims Court and Get Back Overdraft and Other Fees

Fighting Bank Fees in Court

We've all had the experience of getting fees from our bank that seemed suspicious and going through the customer service nightmare. Did you know that the majority of big banks' profit comes from overdraft and other fees?  Sounds rather predatory to me, yet that is the world we live in as corporations become more and more powerful.  
Bank customer service representatives often aren't authorized to give back large amounts in fees, even if the fees were in violation of the bank's user agreement or the law. Filing a lawsuit should never be taken lightly because there's always the possibility that your bank will end up fighting you hardcore and you'll lose and have to pay their attorney's fees. But in many cases, it's not worth the bank's time and money to send an attorney to small claims court, which means you may win with a default judgment. If you're interested in suing your bank in small claims court, here's how to do it:
Keep Meticulous Records 
From the very moment your bank charges you an unwarranted fee, you need to begin keeping meticulous records. This can and should include screen shots of your online bank account, records of phone calls (and recordings as well, as it is legal to record phone calls in Maine, but not Massachusetts), and anything else that can help your case. The more documentation you have, the more likely you are to win.
Know the Law While you can sue over just about everything, if you're not suing over a broken law or breach of contract, you won't win. Know what law or provision of your user agreement your bank is in violation of. Banks, for example, are currently not allowed to charge overdraft fees without your explicit consent via an opt in provision. They also can't violate their own user agreement by, for example, charging you an overdraft fee when you didn't overdraft. You can also sue for negligence if your bank did not change something you asked them to- like taking you off of overdraft protection. Excessive charges, which many states classify as penalties, may also entitle you to sue. For example, it may not be legal for your bank to charge you two hundred dollars in overdraft fees.
File Your Complaint One of the great benefits of small claims court is that you don't need a lawyer, and the filing fee is usually less than a hundred dollars. Of course, this means it's not worth it for you to sue over twenty dollars, but if your bank has charged you hundreds of dollars in fees, it certainly is. You can also sue for damages you incurred as a result of the fees- if, for example, your electric bill was late you can sue for the late fees.
What to Expect Customers who sue their banks often receive a settlement offer before ever going to court. This is the amount the bank is offering to compensate you and is legally binding once you sign it. It's generally unwise to accept less than the money the bank owes you, but it's also a good idea to avoid getting greedy. If you're suing for 10,000 dollars in damages on a hundred dollars in overdrafts, your bank is likely to fight you, and if you lose you could end up paying their attorney's fees.
If the bank does not call you, or you decline the settlement offer, you will then have to prove your case in court. This is where your documentation and any witnesses you have become extremely important. In many cases, the bank will not send a representative. It's generally not worth their time or money to pay an attorney hundreds or thousands of dollars just to avoid refunding bank fees. If this happens to you, you will likely get a default judgment. However, you still need to be prepared to prove your case because different judges have different approaches to default judgments.
After you get a judgment in your favor, you don't automatically get the money. You will then have to collect on it. Your state's small claims court will have information available to you on how to collect, and if your bank does not pay in a timely manner you may be entitled to late fees, interest, etc. Oftentimes getting a bank to pay after you have won the suit is the most difficult part of suing, but stay focused on getting your money. When people begin suing banks in court, it becomes more difficult for banks to cheat customers with exorbitant, unfair, or illegal fees!

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